Naked option

In the case of a naked put, the seller hopes that the underlying equity or stock price stays the same or rises.

In the case of a naked call, the seller hopes that the underlying equity or stock price stays the same or drops.

And the seller's odds of retaining the premium at expiration increase the further the naked option is out of the money at the time it was written.

However, the naked option has the highest risk because sellers have agreed to cover the contract in case of assignment, no matter how far the price of the stock goes.

If the XYZ shares fail to drop below $75 before June 10, the put option expires worthless and Speculator A makes a profit of $24.